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Department of Labor And IRS Issues << Back
Congressional Committee Hears 401(k) Fee Disclosure Testimony - 3/6/2007
TRANSPARENT "CEDE." A Congressional hearing addressed Tuesday whether fees paid by 401(k) participants take too big a chunk out of workers'retirement savings and whether those fees should be more completely disclosed to individual investors. Representative George Miller (D-California) asked the House Education and Labor Committee to consider whether employers should be forced to give workers a clearer understanding of the fees they are paying and to explore whether the fees are carving too big a lump out of retirement savings. In his opening remarks to the committee, Miller said that workers are "simply not in a position to compare plans" and that improving "401(k) transparency is just the beginning of our efforts to ensure that all American have access to a secure retirement." However, Miller was countered by Representative Howard "Buck" McKeon, (R-California), who warned in his statement that forcing fee disclosure should be approached with caution. MORE
Rollovers to IRAs Now Possible for Plan Beneficiaries - 1/30/2007
Summary: Notice 2007-7 includes guidance on the new rules allowing beneficiaries, other than surviving spouses, to make rollovers of plan distributions from qualified plans to IRAs. These rules became effective January 1, 2007. Located at: BNAtax.com. Click on headline for full article.
DOL Fee Project Part 1 -- Revised Form 5500 Proposed - 10/12/2006
Summary: The DOL has proposed revisions to the Form 5500 (Annual Report). Here we review the changes to the Schedule C "Service Provider Information." Located at: CCA Strategies.
Industry Experts Have Ideas for Change on QDIA Proposal - 10/2/2006
"STABLE" VALUED? While industry experts generally applaud the work done by Department of Labor (DoL) on the recently released default investment option safe harbor proposal, they still have suggestions for change, including whether the protected options should include a short-term investment vehicle. Larry Goldbrum, executive vice president and general counsel of The SPARK Institute, said the options make sense. He pointed out that plan sponsors can look at their retirement plan participant population and cater their default investment option choice to the general demographics. However, Dallas Salisbury, president and CEO of the Employee Benefit Research Institute, expressed concerns that, without a stable value or money market-type option (or both), people will take out their money in a down market and have to take the loss. Salisbury wants to add both a money market and a stable value option along with the three existing QDIA alternatives set out by the DoL. Salisbury said he is also concerned that plan lawyers will pressure sponsors away from pushing for additional QDIA alternatives.
Pension Bill Poses Investment Riddle for DOL - 8/20/2006
Summary: If you could pick just one fund for all of your retirement savings, what would it be? Experts, editors and investors have kicked that question around for decades without a satisfactory answer, but the U.S. Department of Labor will try to at least give a partial answer in the next few months. Located at: San Francisco Chronicle. Click on headline for full article.
(k)Plans: Who Needs 404(c)? - 8/1/2006
Qualifying under Section 404(c) of ERISA has long been the Holy Grail of compliance for defined contribution plan sponsors. Meet the 20-plus conditions outlined by the US Department of Labor for satisfying 404(c), and you will not be liable for investment decisions made by plan participants. True enough but for this inconvenient fact: Few plan sponsors actually meet all those conditions and, if recent developments in plan design are any indication, the ranks of noncompliant plans should be growing. The pertinent question for their sponsors: Does it matter?
Late Trading and Market-Timing Mutual Fund Settlements-- What's a Plan Fiduciary to Do? - 5/1/2006
Excerpt: "The Securities and Exchange Commission ('SEC') has entered into settlement agreements with certain mutual funds relating to alleged late trading and market timing activities. .... Since qualified retirement plans may have invested in mutual funds involved in the settlements, the Department of Labor issued Field Assistance Bulletin No. 2006-01 to address the fiduciary issues involved with allocation of the settlement proceeds among retirement plan participants." (Poyner & Spruill LLP)
DOL Official Reveals Work on Safe Harbor for Provision of Default Investment Fund - 4/20/2006
Excerpt: "In order to qualify for that safe harbor ... fiduciaries have to allow participants the opportunity to move their investments into a different account, provide advance notice of the default alternative and invest the assets in a certain kind of qualified default investment alternative." (BenefitNews.com)
EBSA Fact Sheet: Voluntary Fiduciary Correction Program - 4/20/2006
Excerpt: "On April 19, 2006, the Department of Labor published in the Federal Register a 2006 Update of the Voluntary Fiduciary Correction Program (VFCP), which simplified and expanded the original VFCP published in 2002. The VFCP is designed to encourage employers to voluntarily comply with the Employee Retirement Income Security Act (ERISA) by self-correcting certain violations of the law." (U.S. Employee Benefits Security Administration)
How Many Roth Clocks Does A Plan Have to Track? - 3/28/2006
Excerpt: "A 5-taxable year period (sometimes called 'the 5-year clock') must expire before a participant can receive a tax-free Roth distribution (a qualified distribution). The newly proposed Roth tax regulations require a Roth 401(k) plan to keep track of the 5-year clock for each Roth participant." (SunGard Corbel)
Cautionary Tales: Penalties for Failure to Timely Provide Requested Documents - 3/23/2006
Excerpt: "ERISA requires a plan administrator to furnish certain plan documents within 30 days after a written request by a participant or beneficiary; a plan administrator that fails to comply may be liable in an amount up to $110 per day from the date of the failure or refusal." (Employee Benefits Institute of America Inc.)
Chart Comparing Retirement Bills, H.R. 2830/S. 1783), Administration Proposals, and Current Law (PDF) - 1/24/2006
19 pages. The chart also outlines the American Benefits Council's positions on the leading single-employer pension funding reform proposals. (American Benefits Council)
IRS Announces New Pension Limits for 2006 (PDF) - 10/14/2005
3 pages. Excerpt: "[T]he limitation under section 402(g)(1) on the exclusion for elective deferrals described in section 402(g)(3) is increased from $14,000 to $15,000... The limitation for defined contribution plans under section 415(c)(1)(A) is increased from $42,000 to $44,000." (Internal Revenue Service)
Overview: Proposed Regs for Nonqualified Deferred Comp Plans under Code Section 409A - Part II - 10/3/2005
8 pages. Excerpt: "This Bulletin addresses the treatment of stock options, stock appreciation rights (SARs) and other forms of equity based compensation under the proposed regulations issued by the Internal Revenue Service (IRS) on September 29, 2005, under Section 409A of the Internal Revenue Code of 1986." (Sherman & Howard L.L.C.)
Hewitt Federal Legislation Quick Guide Updated as of September 20, 2005 - 9/27/2005
Excerpt: "Hewitt's Federal Legislation Quick Guide provides short updates on federal legislation that is currently under active consideration by Congress or has recently been enacted into law regarding health and welfare benefit plans, retirement plans, and human resources and employment law." (Hewitt Associates)
Brief Overview of Advance Planning for 401(k) Plans and 403(b) Programs (PDF) - 8/1/2005
2 pages. Excerpt: "Due to recent regulatory developments, employers that sponsor 401(k) plans or offer 403(b) programs may need to plan ahead for potential changes to plan operations or plan documents. This publication addresses a few of these items." (The Prudential Insurance Company of America)
DOL Factsheet: Tips for Selecting and Monitoring Service Providers for Your Employee Benefit Plan - 6/2/2005
Excerpt: "To assist business owners in carrying out their responsibilities under ERISA to prudently select and monitor plan service providers, the Employee Benefits Security Administration has prepared [12 tips as a starting point.]' (U.S. Employee Benefits Security Administration)
SEC to Issue Guidance to Pension Funds - 5/20/2005
Excerpt: "Retirement plan sponsors can expect federal guidance in coming weeks on how to steer clear of pension consultants who may have conflicts of interest. The Securities and Exchange Commission is providing direction following a recent report that found many investment advisers are neglecting their fiduciary responsibilities." (BenefitNews.com)
Mutual Funds Consider Redemption Fees for Short-Term Investors in Light of SEC Rule - 5/17/2005
Excerpt: "The Securities and Exchange Commission will let mutual fund companies charge short-term investors fees if their rapid trading hurts long-term investors. The rule, approved in March and effective next year, is an effort to limit market timing, a legal practice that can lead to high costs for long-term investors, such as 401(k) participants." (Employee Benefit News)
Analysis: Automatic Rollovers – March 28th Deadline is Here (PDF) - 4/5/2005
11 pages. Excerpt: "The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) added a new rule – section 401(a)(31)(B) of the Internal Revenue Code of 1986, as amended (the 'Code') – that requires plans with mandatory distributions over $1,000 to provide that, if a participant fails to elect to receive the distribution directly or have it paid to a designated plan or IRA in a direct rollover, the distribution must be made in a direct rollover to an individual retirement plan ...." (RIA via Groom Law Group)
IRS Issues Comprehensive Final Regulations for 401(k) Plans - 2/2/2005
On December 29, 2004, the IRS and the Treasury Department released comprehensive final regulations governing 401(k) plans. These regulations, first issued in proposed form in July 2003, update the existing final regulations (last issued in 1994) to reflect statutory changes and related IRS rulings made in the intervening years. Located at Dechert.com (PDF). Click on headline for full article.
Excessive 401(k) Plan Fees and Costs: The Coming Storm in ERISA Litigation? - 2/1/2005
Excerpt: "[W]hat is the next ERISA litigation trap for corporate officers and directors that preside over their companies' retirement plans? The answer may be claims relating to payment of excessive fees and expenses. One of the fundamental responsibilities of ERISA fiduciaries is 'defraying reasonable expenses of administering the plan.' .... The typical types of expenses incurred by a plan are administrative expenses such as fees paid to accountants, attorneys, consultants and third ...." (Reish Luftman Reicher & Cohen)
Retirement Plan Limitations for 1996 through 2005 - 1/1/2005
Summary: To assist plan sponsors, Ice Millers updated Cost of Living Adjustment chart lists the cost of living adjustments to retirement plan limitations for the years 1996 through 2005. They have included the adjusted limits, as well as Pension Benefit Guarantee Corporation, Federal income tax, Social Security, and Medicare amounts, for the past nine years as a handy reference tool. Located at: Ice Miller (PDF file). Click on headline for full article.
DOL Creates Safe Harbor for Automatic Rollovers - 11/4/2004
Summary: The Department of Labor has issued final regulations establishing a "safe harbor" for retirement plan fiduciaries when transferring amounts to an individual retirement arrangement pursuant to the tax codes rules governing mandatory distributions. The final rules, which are effective for distributions on or after March 28, 2005. Located at: Milliman USA (PDF file). Click on headline for full article.
IRS Issues Proposed Regulations Pertaining to Phased Retirement - 10/10/2004
Summary: The IRS has issued proposed regulations pertaining to phased retirement. This is a long-awaited and long-overdue development in the benefits arena. While there will be much more on this later, here is what the IRS has to say in its regulations regarding why it has issued the regulations and its approach to clearing some of the legal hurdles to permit "phased retirement." Located at: Benefitsblog.com. Click on headline for full article.

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